The Crypto Winter

David Honig honig at sprynet.com
Mon Nov 19 17:03:43 PST 2001


At 01:27 AM 11/20/01 +0200, Sampo Syreeni wrote:
>On Mon, 19 Nov 2001 georgemw at speakeasy.net wrote:
>
>>It's amazing how many people assert this, even though it's clearly
>>wrong.  A gold standard does NOT mean that the amount of currency in
>>circulation equals the amount of gold in the vaults, it means that the
>>currency is exchangeable for gold at a fixed rate.  Obviously, there can
>>be more gold in the vaults than you need to actually exchange every
>>dollar for the correct amount of gold. Less obviously, there can be
>>less.
>
>Of course, the system also exposes the currency to fluctuations in world
>wide supply of gold. It's not sane policy to tie one's unit of currency to
>any particular good -- think about what it would mean if the chosen good
>was unrefined oil, a particular crop or electrical power. One'll get the
>picture fairly soon.

Yes, but what this thread has ignored is that gold (and other
densely precious things) were valued *in and of themselves* and so 
using them as money was not symbolic.  You traded your goat
for a goat's worth of gold; if trust evaporated overnight
the gold is still worth something.  Similarly with barrels
of oil.  If you discover a lot of it under your topsoil, you
get wealth because the substance itself has utility.

>It's not really sane to opt for a tie-in to the supply of a particular
>currency, either -- that's actually even worse, since the people printing
>the bills can cause fluctuations in the exchange rate even easier than
>they could if they were just digging up precious metals up from the crust.
>
>Hence, private, floating currency, which, again, is old news on the list.

Clearly stated.





 






  








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